EFG International AG

EFG reported first-half 2026 IFRS net profit of CHF 185 million, up 5% year on year excluding a one-off gain from last year. Return on tangible equity was 22.4%, up 3 percentage points year on year and above the 20% 2028 target. Operating income rose 7% year on year to over CHF 850 million, while the revenue margin declined to 91 basis points from 97 basis points. Net new assets were CHF 5.7 billion, equivalent to 6.2% annualized growth, and assets under management reached CHF 196.3 billion at end-June before the Quilvest closing; management said AUM crossed CHF 200 billion after the acquisition closed. Cost-to-income was 71.5%, better than the second half of 2025, and CET1 capital was 15% with total capital at 18.3%. For the full strategic cycle, management reiterated targets of 4%-6% NNA growth, around 68% cost-to-income, and 20% ROTE by 2028, and said the medium-term margin should be around 90 basis points, or about 90 excluding life insurance.

Giorgio Pradelli framed the quarter as a strong start to the 2026-2028 cycle, emphasizing that EFG is combining organic growth with acquisitions while staying focused on quality rather than size for its own sake. He highlighted the Quilvest closing, record AUM above CHF 200 billion, 15 straight semesters of positive NNA, and confidence that the bank can keep compounding by controlling what it can: client activity, mandate penetration, and mix. His tone was upbeat and confident, but he repeatedly stressed that interest-rate moves and life insurance can create noise in reported margins.

Dimitris Politis focused on the financial engine: CHF 185 million of bottom-line profit, 22.4% ROTE, 91 basis points of margin, 71.5% cost-to-income, and 230 basis points of organic capital generation. He said revenue improved because net commission income rose 20% year on year and the commission margin increased from 44 to 46 basis points, while interest-related income rose 4% despite lower rates because the bank used more treasury swaps and volumes increased. On costs, he said headline expenses were up 8% due entirely to acquisitions, but costs excluding acquisitions were flat, and Simplicity 2.0 should deliver CHF 15 million to CHF 20 million in 2026 and CHF 70 million to CHF 80 million by 2028, with roughly CHF 7 million to CHF 8 million already in the first-half P&L. He also pointed to CHF 20 billion of liquid assets, an LCR of 267%, and said the capital build reflected organic generation plus non-cash add-backs from the equity incentive plan.

Analysts pushed on whether the 91 basis point margin was sustainable, with questions on the exit rate, interest-rate sensitivity, and why the first-half margin fell from 93 basis points in the first four months. Management said the gap was mainly the life-insurance line, that the business itself was stable, and that the exit margin should not be very different from the first-half average because the balance sheet reprices quickly. There were also questions on CRO hiring and competition; management said hiring was strong, likely at the top end or above the usual 50-70 range, but competition has increased across geographies, especially as other banks re-enter wealth management. Another notable topic was acquisitions: management said they are already contributing single-digit CHF millions to profit but currently drag on cost-to-income because of restructuring costs and will contribute more after full technology integration in the first half of 2027.